Friday: 5 Things That The Market Is Talking About

The Bank of Japan goes negative, stocks go positive and tons of U.S. data is coming out. Here are some of the things people in markets are talking about today.

1. BOJ goes negative

In a surprise move, the Bank of Japan announced that it is adopting a negative interest-rate strategy while maintaining the pace of its asset purchases. By a 5-4 vote, the bank agreed to introduce a rate of minus 0.1 percent on certain excess holdings of cash, with the changes taking effect from Feb. 16. Government bonds across the world have jumped in response to the decision with Japanese yields falling to a new record low. The yen is also tumbling.

2. Stocks go positive

Reaction in Japanese stocks to the BOJ move was volatile, with the Topix swinging between gains of more than 3 percent and a loss of 1.6 percent following the announcement before closing 2.9 percent higher. In Europe, the Stoxx 600 Index gave up some earlier gains to trade 0.6 percent higher at 11:00 a.m. London time. U.S. futures point to a gain at the open.

3. Oil goes nowhere

Brent crude rallied nearly 8 percent in trading yesterday following what turned out to be false hope of a production cut led by Russia and OPEC. In an interview with Bloomberg Television, Russia’s Energy Minister Alexander Novak said a decision on cutting production is only possible if all crude-producing nations were to agree, while confirming there is no timing for talks. At 11:15 a.m. London time a barrel of Brent was unchanged at $33.89, having traded as high as $34.85 earlier.

4. Bonds rally around the world

U.S. government securities have returned 1.8 percent this month, rallying for the third January in a row. In Japan, the yield on 10-year government bonds hit an all-time low of 0.09 percent. In Germany, the five-year note yield reached a record low of minus 0.298 percent. Euro area inflation data, which showed annual inflation in December at 0.4 percent, means investors continue to believe that central banks will need to do more to spur inflation.

5. U.S. data

There’s a raft of U.S. economic data due today. The Commerce Department publishes its first look at the U.S. economy’s performance in the fourth quarter at 8:30 a.m. EST on Friday, with economists surveyed by Bloomberg expecting a reading of 0.8 percent annual rate growth over the period. Other numbers coming out today include the fourth-quarter Employment Cost Index, Chicago PMI, University of Michigan Sentiment, and ISM Milwaukee.

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell